India Hits 'Pause' On Crypto While Rivals Race Ahead.Will A Long-Delayed Policy Paper Change That?
Regulating cryptocurrency would involve various Government departments, including finance, IT, and law enforcement agencies.
The Government plans to release a discussion paper on cryptocurrency this month. It will solicit public opinion on various aspects of the cryptocurrency industry and how to regulate it. The proposed discussion paper has been overdue since September 2024, when it was initially planned to be launched.
Given the rapid adoption of cryptocurrencies in India on the one hand and a complete lack of regulatory guidelines on the other, it creates a tough situation for both investors and industry players. Following the recent announcement by US President Donald Trump to create a strategic bitcoin reserve, India needs to break from policy indecision and catch up with the rest of the world quickly. Closer to home, arch-rival Pakistan has also made news by proposing to set up a bitcoin reserve and allow the crypto mining industry to establish a presence in Pakistan.
Here is an industry wishlist:
Accord Legal Status
The cryptocurrency world encompasses a diverse range of innovative blockchain products, including a growing number of cryptocurrencies, non-fungible tokens (NFTs), decentralised finance (DeFi), crypto exchanges, and marketplaces.
Recognising them and providing an efficient legal and regulatory environment for all these products is necessary for this sector to grow and stay competitive. A comprehensive set of laws and regulations that create legal business entities in the crypto ecosystem is one of our top demands.
Rationalisation of Taxes
In February 2022, the Government introduced a set of taxes on cryptocurrency activities that proved detrimental to Indian crypto exchanges. These taxes include a 30% capital gains tax and 1% TDS on crypto transactions.
The provisions also include the inability to offset or carry forward losses. As these taxes drove traders to offshore exchanges, many of which are not registered in India, the Government should reduce the taxes, especially the 1% TDS, to 0.01% to create a level playing field.
Investor Protection
Protecting investors from security breaches and fraud is a primary concern for both the crypto industry and the Government. Implementing the industry's best security solutions, combined with continued research and innovation, is the key to success.
The Government should engage with stakeholders and industry players to develop and implement a comprehensive investor protection mechanism, thereby creating a robust KYC/AML and consumer grievance redressal system.
Appointment of a Regulator
Regulating cryptocurrency would involve various Government departments, including finance, IT, and law enforcement agencies. It is necessary for crypto firms to be licensed and regulated by an exclusive regulator. It would help create a seamless operation across all domains and departments.
Crypto Merging with Real-World Economy
The cryptocurrency industry and Government policies are advancing at a rapid pace, with a significant shift towards it. From institutional adoption to ETF products, the realm of cryptocurrency is rapidly merging with the real-world economy.
At this pivotal moment, India must have a clear, dynamic, and forward-looking cryptocurrency policy to tap the new opportunities. Launching a crypto discussion paper is a welcome first step towards a comprehensive crypto policy as soon as possible.
(The author is the CEO of BuyUCoin)
Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd.
Top Headlines
